The Consumer Price Index (CPI) increased a staggering 1.2% in March 2022 after 0.8% in February
That is 2.6% for the last three months. Project three months out to a full year would be 10.4%
Graph at top of this post shows the monthly increase in the all-items index along with the core change, which excludes food and energy. Graph also shows an average of the preceding 12 months for the all-items indicator.
By the way, with the CPI accelerating the top number in all of these graphs had to be increased. That is the result of high inflation that is accelerating,
The 12 month cumulative change continues to skyrocket. The monthly change in all items index and the cumulative change for 12 months looks as follows:
Rising PCE price index is sitting at the highest level since 1982, which is 40 years ago.
Unless you are in your 60s or older, you have little memory of inflation at this severe a level. If this sustains for a few more years, the impact will be brutal.
Personal Consumption Expenditure (PCE) inflation index increased 0.6%, which follows 0.5% in January 2022 which was revised downward from 0.6%.
The core PCE inflation rate (without food and energy) was 0.4% in February, following 0.5% rise in January, matching the 0.5% increase for the previous three months. The October 2021 increase was revised up 0.1%.
The Securities and Exchange Commission issued proposed rules for emissions risk accounting and disclosures by public companies. After the 60 day comment window the SEC will work on final rules.
The proposal creates three areas for measurement and disclosure. Scope 1 is emissions from a company’s own operations, whether it is manufacturing cars, producing coal, or running a bank. Scope 2 is emissions generated from the energy consumed by company as an input to their operations. This could be the electricity to operate the branches and computers of a bank or it could be all of the coal consumed to produce steel.
As if that does not stretch your brain far enough, there is Scope 3. Those are the missions of all of the vendors to a company and all the consumers of its products. This is not just immediate vendors and direct consumers. This includes the emissions of the vendors’ vendors and their vendors, all the way back to when raw materials were first pulled out of the ground.
This includes emissions generated by your customers as they use your products and also your customers’ customers’ emissions. This goes all the way to the end consumer. Furthermore, this is life cycle costs.
As a brain stretcher, for a utility providing natural gas to consumers Scope 3 would include the emissions generated as consumers heat their home. The lifecycle is very short since the gas will be used as soon as it arrives at the houses.
The Producer Price Index (PPI) rose 0.8% in February. The previously reported 1.0% rise in January was revised to 1.2%. So that is actually a cumulative increase of 1.0% in February
Keep in mind the prior monthly increases PPI are revised as needed. This is in contrast to CPI which is not revised.
In February, core PPI, without food, energy, & trade, was up 0.2% in February with January revised downward from 0.9% to 0.8%.
“The Producer Price Index (PPI) is a family of indexes that measures the average change over time in selling prices received by domestic producers of goods and services. PPIs measure price change from the perspective of the seller. This contrasts with other measures, such as the Consumer Price Index (CPI), that measure price change from the purchaser’s perspective. Sellers’ and purchasers’ prices may differ due to government subsidies, sales and excise taxes, and distribution costs.”
So the PPI measures prices received by producers for their goods and services. Those costs roll into the goods and services you and I buy as end consumers.
This means the increases in wholesale prices, which show a lot of inflation, are heading our way as those increases work themselves into the CPI.
Graph at the top of this post shows the monthly price change for total demand with separate line for total demand goods and total demand services.
With revisions, the year over year increase in PPI is 10.0% in February and January, which is only a slight increase from 9.9% in December and November and the increases were just under 9.0% for October back to August.
Take a look at the year over year change in final demand and core change which means without food, energy, and trade.
The Consumer Price Index (CPI) increased 0.8% in February 2022 after increasing 0.6% in January, 0.5% in December 2021, and 0.8% in November.
That is 1.9 % for the last three months.
Graph at top of this post shows the monthly increase in the all-items index along with the core change, which excludes food and energy. Graph also shows an average of the preceding 12 months for the all-items indicator.
The 12 month cumulative change continues to skyrocket. The monthly change in all items index and the cumulative change for 12 months looks as follows:
Well, the PCE increased the most in only 39 years, but that’s really close to four decades.
The headline Personal Consumption Expenditure (PCE) inflation index increased 0.6% in January 2022 following December’s increase of 0.5%, which was revised upward from previously reported 0.4%. That follows 0.6% in November and 0.6% in October 2021.
The core PCE inflation rate (without food and energy) was 0.5% in January, matching the 0.5% increase for the previous three months. The October 2021 increase was revised up 0.1%.
The cumulative 12-month change for 2021, according to BEA, is up 6.1% overall and 5.2% excluding food and energy.
The Personal Consumption Expenditure (PCE) inflation index increased 0.4% in December 20212, which is a slight decline from 0.6% in November and 0.6% in October 2021. The December increase is in line with 0.3% to 0.5% for prior five months.
The core PCE inflation rate (without food and energy) was 0.5% in December following 0.5% November and 0.4% in October
The cumulative 12-month change for 2021, according to BEA, is 5.8% overall and 4.9% excluding food and energy.
Yeah, the research wizards at the Ag Department concluded food inflation in 2021 was exact same as 2020. We will see even smaller price increases in 2022.
US Department of Agriculture – 1/28/22 – 2021 retail food price inflation continued at the same pace as 2020, but varied among food categories – In a clever disinformation effort, the alleged economists at the Economic Research Service of the U.S. Department of Agriculture claim food prices increase of 3.5% during 2021 was the same rate of increase as in 2020. The mere 3.5% during 2021 is only slightly higher than the historical average of 2% from 2000 through 2019.
In newsflash to everyone who actually buys groceries or goes to a restaurant, food prices barely increased in 2021.
(Discussion cross-posted from my other blog, Nonprofit Update, because understanding impact of high inflation on our clients helps us serve them better.)
Because of the pushback this article is already receiving, it will likely be memory-holed momentarily so I will quote a few parts of the article. Will quote the entire article at the end of this post.
The headline information:
“Retail food prices increased by 3.5 percent in 2021, equal to the rate in 2020 and greater than the historical annual average of 2.0 percent from 2000 to 2019. Of the 12 food categories depicted in the chart, six showed slower price increases in 2021 compared with 2020.”
Prices for half the food you buy are coming down. Cool, huh?
Today, January 28, 2022, marks the twentieth anniversary of the Ulvog CPA firm.
It has been a joy to serve the nonprofit community for these two decades as an independent CPA firm. Focusing on the religious nonprofit community has been a professional honor and a personal delight.
Thanks to all the organizations who have made this journey possible.
Looking forward to many more years of serving churches and ministries.
After the Great Recession back in 2008, there was great hue and cry demanding that hundreds of bankers be thrown in prison, every one of them to spend the remainder of their life in a dank, dark dungeon.
Nice concept.
Has a good, solid, rewarding emotional feel. Just the thought all those horrible bankers in jail gives you a warm fuzzy feeling all over.
The only problem is for that to happen, federal prosecutors have to actually, you know, prove their case.
Little teeny, tiny problem standing in the way – – proving manipulation is difficult.
So difficult that all convictions for alleged LIBOR manipulation in the United States have now been overturned.
So much for throwing all the bankers in jail.
The core challenge is proving one specific individual committed a specific crime. A particular bank as a whole may have committed crimes, which can be proved. A department overall can be shown to have committed a crime. The challenge is to prove one specific guy over there, yeah that one, had intent to and did violate a specific criminal code.
News keeps rolling in about senior Fed officials trading stock when they have extremely valuable inside information. Tally grows of federal judges who did not recuse themselves when they had a financial interest in a case they were hearing. Oh yeah, Chief Justice Roberts of the Supreme Court had his own failure-to-recuse oopsie.
This round of lack-of-integrity-by-senior-officials news reports, federal edition:
800 more failure-to-recuse by federal judges. The Chief Justice did not recuse himself until after oral arguments in a case where he had a mere $100K personal investment in one of the litigants.
Vice Chair of the Fed resigns after news leaks out of timing for his stock trades.
Previously, two regional bank presidents of the Fed resigned this past October.
The supply chain is complicated. There is no switch you can throw to magically make all those connections smoothly work together again. Image courtesy of Adobe Stock.
The supply chain for everything is tangle up to the extent it will take lots of time to function normally again.
Two articles describing the depth of issues:
Analogy of turning off a complex computer system. Some of the hundreds of components won’t work when you throw the ‘on’ switch.
Description of the demand side pressure on supply chain. All those trillions of federal dollars sloshing around have created demand which has overloaded distribution systems.
(Cross posted from my other blog, Nonprofit Update, because it will be helpful to understand broad supply chain issues for audits during the upcoming busy season.)
American Thinker – 12/11/21 – We broke everything in the name of Covid – Author ran a large IT department at one point in the past. Every few years they had to shut down the entire computer system so that the factory could go through maintenance of the electrical system.
There’s an old saying that the wheels of justice grind slowly, but they grind very fine. In the accounting world the wheels of justice don’t even start to turn until the criminal justice wheels have ground everyone into powder.
Effective this past August and November two of the key former partners from KPMG involved in the PCAOB inspection cheating scandal surrendered their licenses.
